RESOURCES

Important Clarification of PFL Withholdings Method

January 17, 2018

As of this week, there is formal alignment of State agencies with respect to how employers need to withhold employees’ Paid Family Leave premiums. In light of this latest clarification, let us walk you through the now required way of withholding by NY State government:

The 2018 maximum contribution rate for Paid Family Leave is 0.126% of the employee’s annualized wages capped at the annualized New York State Average Weekly Wage (NYSAWW) of $67,907.84 per year;* which means the maximum annual premium to be charged to an employee for Paid Family Leave is $85.56 per year.

Here are a few examples of how the withholdings are intended to work (for illustration purposes only):

Example Employee

Annual Income

Typical Weekly Income (not including bonus)

2018 Maximum Contribution Rate

Annual
Contribution

Typical Weekly Contribution

Bonus Week Contribution

Last Contribution Week in 2018

John

$50,000

$961.54

0.126% of
annual income, capped at $85.56

$63.00

$1.21

N/A

52

Jenna

$80,000

$1,538.46

$85.56

$1.94

N/A

45

Jeff

$80,000 + $50,000 bonus in February

$1,538.46

$85.56

$1.94

$64.94

12

Let’s look at a further break-down of how the withholding works specifically for Jeff in 2018:

Jeff has a base salary of $80,000. Jeff’s typical weekly income is based on his base salary (not his total annual income) to calculate his typical weekly contribution: $1,538.46 x 0.126% = $1.94. His withholdings end as soon as he reaches the $85.56 annual cap. This is above the $1.65/week which was previously defined as the cap. Without a bonus, he would meet his annual maximum contribution of $85.56 in the summer, and not have any further withholdings for the rest of the year.

But Jeff landed a big international account in February, worth a $50,000 bonus. This changes things! His contribution in the bonus week now jumps to $64.94 (bonus plus typical weekly income times 0.126%). Due to the contribution spike in this week, he now pays his maximum contribution much sooner, in spring, and thereby doesn’t need to render any further PFL contributions for the remainder of the year, no matter how many additional deals (bonuses) he lands. See chart for details.

Week

Wages

Weekly
Contribution

Cumulative
Contribution

1

$1,538.46

$1.94

$1.94

2

$1,538.46

$1.94

$3.88

3

$1,538.46

$1.94

$5.82

4

$1,538.46

$1.94

$7.75

5

$1,538.46

$1.94

$9.69

6

$1,538.46

$1.94

$11.63

7

$1,538.46

$1.94

$13.57

8

$51,538.46

$64.94

$78.51

9

$1,538.46

$1.94

$80.45

10

$1,538.46

$1.94

$82.38

11

$1,538.46

$1.94

$84.32

12

$1,538.46

$1.24

$85.56

13+

$0.00

$0.00

$85.56

This blog post is for informational purposes only and is not intended to provide legal counsel. Please consult with an appropriate professional for legal and compliance advice. Any PFL information is as of the blog post’s date stamp; it is based on the applicable statutes and regulation, and may change as regulations evolve or NY State issues guidance regarding Paid Family Leave regulations. Have more questions? Email us at pflquestions@shelterpoint.com